Legality of wholesaling in Connecticut.

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Legality of wholesaling in Connecticut.

John Fenny
Real Estate Investor · Manchester, CT · Member since 2016 · 7 posts · 5 votes

I know there a post about this all over the place, but I haven't found too many in regards to Connecticut and I want to find specific information.

I know there are people wholesaling in Connecticut, some of whom do not have a license, yet they are doing it anyways. From what I've read, this is because if you have a contract to purchase, and then assign the contract. People say it is legal by a) you have equitable interest in the house by putting it under contract, therefore you have the right to market it, and b) you're not really selling a house, you're selling the contract. Anyways, people come up with all sorts of ways to get around it. My question is there a way, in Connecticut, where you really can do what's stated above, without a license, legally? (Without ACTUALLY buying it yourself first, because I'm 21 and don't have money like that laying around.... yet ;) ) if so, how are they doing it.

Also, I'm looking to get licensed either way. I just know that takes a little bit of time and I want to possibly start closing deals before then. Can anyone recommend the best school/classes to get licensed in CT? Preferably online.

Thanks for the help!

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Rick SantasierePro Member
Real Estate Broker · Granby, CT · Member since 2015 · 694 posts · 317 votes
9y

@John Fenny.  There is a crash RE course in MA, and CT and MA are reciprocal license states.  There are pros and cons and I would be happy to share my opinions with you.  As far as the wholesaling question, I too felt a lot like @Mark McClure in regards to taking advantage of people, but I have started to loosen up my thoughts in relation to the service they provide.  At first, it absolutely seems as if a wholesaler can be viewed as someone trying to "steal" a house from someone, but there are so many variables involved, that I didn't quite see years ago (when I felt that wholesaling should NOT be legal).  A wholesaler can actually help someone in desperate need for so many reasons.  There are some homeowners that are just not savvy enough with financing, mortgage, tax liens, to navigate a potential foreclosure (as an example). There are times where there is considerable equity in a property, and the owner loses it to foreclosure, which is sad. Offering someone cash before that happens and clearing their debt up can be one area of assistance. I could spend hours discussing different ways that a wholesaler can truly help in regards to death, taxes, health, etc, but I won't.  I will say however, there are wholesalers who are NOT doing the right thing, and are playing in the "gray area" of legality.  Those people will not last and will lose credibility quickly.  My hope is they do not take advantage of someone who truly needs the assistance.  If you are thinking of wholesaling, get a mentor for sure. If you are getting licensed as a real estate agent (good for you!!), you probably should not mix the two for serious liability concerns.  Once you are licensed, you are held to a much different standard in the community as Mark and I are.  My$.02

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  • Phil Z.
    Real Estate Broker · Orange, CT · Member since 2013 · 951 posts · 218 votes
    9y

    - You can take classes at most local Board of Realtors.

    - I've never heard of any legal issues with assigning a contract.

    1Reply
  • Mark McClure
    Rental Property Investor · Jacksonville, FL · Member since 2016 · 25 posts · 25 votes
    9y

    Hi John,

    Unfortunately there are no online classes in CT.  You must sit thru 66 hours of classroom. The Greater Hartford Association of Realtors has a class I believe Tues & Thur nights in West Hartford. I took the Sat classes in Southington at the Real Estate Development Center with Dick Rubino who was excellent. 

    As for wholesaling I've always questioned its legality myself, just seems sketchy and the few wholesalers I've talked to have gotten their deals by taking advantage of people in a desperate situation.  I'm sure there are good wholesalers but I wouldn't want to haggle over pennies with someone in a dire situation and take away their home. Just my opinion. Good luck!

    2Reply
  • Rick SantasierePro Member
    Real Estate Broker · Granby, CT · Member since 2015 · 694 posts · 317 votes
    9y

    @John Fenny.  There is a crash RE course in MA, and CT and MA are reciprocal license states.  There are pros and cons and I would be happy to share my opinions with you.  As far as the wholesaling question, I too felt a lot like @Mark McClure in regards to taking advantage of people, but I have started to loosen up my thoughts in relation to the service they provide.  At first, it absolutely seems as if a wholesaler can be viewed as someone trying to "steal" a house from someone, but there are so many variables involved, that I didn't quite see years ago (when I felt that wholesaling should NOT be legal).  A wholesaler can actually help someone in desperate need for so many reasons.  There are some homeowners that are just not savvy enough with financing, mortgage, tax liens, to navigate a potential foreclosure (as an example). There are times where there is considerable equity in a property, and the owner loses it to foreclosure, which is sad. Offering someone cash before that happens and clearing their debt up can be one area of assistance. I could spend hours discussing different ways that a wholesaler can truly help in regards to death, taxes, health, etc, but I won't.  I will say however, there are wholesalers who are NOT doing the right thing, and are playing in the "gray area" of legality.  Those people will not last and will lose credibility quickly.  My hope is they do not take advantage of someone who truly needs the assistance.  If you are thinking of wholesaling, get a mentor for sure. If you are getting licensed as a real estate agent (good for you!!), you probably should not mix the two for serious liability concerns.  Once you are licensed, you are held to a much different standard in the community as Mark and I are.  My$.02

    5Reply
  • KinYat Lam
    Rental Property Investor · Norwalk, CT · Member since 2016 · 35 posts · 15 votes
    9y

    @John Fenny I don't know any online courses that you can take to get a license, but I do know that there are courses in Norwalk Community College that you can take to help you get your license. But do you want to be a wholesaler or an agent? You don't really need your license to become a wholesaler!

    1Reply
  • Nik Parks
    Astoria, NY · Member since 2013 · 40 posts · 4 votes
    9y

    @Rick Santasiere That's an excellent example of why wholesaling isn't unethical (or doesn't have to be). Do you have more examples? Just curious :) I actually plan on wholesaling soon so I don't think it's inherently shady. 

    0Reply
  • Rick SantasierePro Member
    Real Estate Broker · Granby, CT · Member since 2015 · 694 posts · 317 votes
    9y

    @Nik Parks, I could easily spend 10 minutes describing how I feel wholesaling is unethical as well.  The reason I feel that wholesaling is NOT the best option for the consumer it that it does not grant the seller many options.  However, there is a time and a place for everything, but it would be silly for me (as a licensed real estate broker) to prefer "wholesaling" to what I can do, which is truly help the consumer first. Wholesaling is "shady" when newer people go out there and try to do it without understanding the process or how to convey the message to the seller. Do you know how many times I have read on BP (and had my phone blown up) do the statement "The seller won't pay me the fee we agreed to." There is a valid (and legal) reason for that.  Real estate law states (and yes, there is some grey areas in SOME states) in order to "collect a fee" for a real estate transaction, you must be a licensed real estate broker to collect fees. I like the wholesale idea, it can make sense.  But for me, solving the consumers problems (which in the end if what life is all about - helping people and protecting the consumer), should be the first priority in all of this. My $.02

    0Reply
  • Jeffrey VanGilder
    Enfield, CT · Member since 2017 · 73 posts · 26 votes
    9y

    As someone new to bigger pockets and someone close to your situaton @John Fenny. I would suggest other routes. I see wholesaling sitting in that grey area other have talked about. To me though, its a fork in the road. You are going down the road of wholesaling and strictly being an investor and not being an agent. While this is just my two cents, I woudn't want to rush things. Sounds like your looking for the shortest route to the finish. Without taking shortcuts you are sure to learn much more in the long hual of the process and while the money seems to be an quick payday when you are wholesaling I feel like over all their is much more moneys to be had in the reputable side of being a licensed agent. Invest on the side and maybe you can work with other investors as an agent, find them deals, find yourself deals and all along the way your building a network that works with you. 

    Again this is my opinion and just wanted to put the thoughts of another newbie into this conversation. Learn as much as you can and make a well educated decision. If you fail, evauate why you failed and learn from your mistakes. Dont expect to be the next rockstar but dont doubt yourself ever either. 

    1Reply
  • Thomas Kareeparampil
    Rental Property Investor · CT · Member since 2016 · 37 posts · 7 votes
    7y

    Just wanted to bump that back to top of the forum. Anyone have success with wholesaling in Connecticut this past year?

    0Reply
  • Ryan LubyPro Member
    Rental Property Investor · CT · Member since 2016 · 258 posts · 227 votes
    6y

    As far as I know, in CT assigning contract is perfectly legal. I’ve worked at two separate companies where I’ve done assignments in CT and double-close in others states where assignments are either not legal, or where the seller prohibits assignment as stated in their contract.

    My thoughts on it all.

    -Wholesaling can be done ethically and when done so, is an amazing option both for the seller and for the wholesaler. 


    -To be ethical you have to be honest, and ideally be a person who is experienced and capable enough to give (or at least lay out) mtiples options to the seller. The option to sell to us for cheaper, the option to list on MLS, the option to do FSBO, to hold and rent maybe, to renovate to sell closer to ARV, or the option for us to wholesale.

    - If you are a good wholesaler you work backwards. Find great buyers and spend time truly understand their process, their buying criteria & desired market(s), and their capacity (how much can they buy/run per month). From there you can now track down **targeted leads that you already have buyers for. Then you explain everything to the seller as previously stated, if they agree and sign the contract with you for their desired price, you can now market to assign or double-close if needed to your buyer(s).

    - I think Bret Snodgrass takes it a step further and actually closest, cleans up the property and then markets to his buyers which is a great process as well, but require way more capital and comes with a lot of risk.

    - wholesaling as I described it can be great, and there is “less risk” but if you jump into it because you think it’s easy, and you have no experience and you don’t work backwards you’re taking the most risk by risking your reputation so Then both sellers and buyers don’t trust you


    4Reply
  • James McCard
    Investor · New Hartford, CT · Member since 2016 · 282 posts · 104 votes
    6y

    To me it is definitely a gray area, however you may be okay with that. It all depends on what your comfort level is. I do not wholesale houses but I have considered it. If you have a knack for finding deals that no one else can and have too many to close on personally I think wholesaling is a good option and cherry picking the best for yourself. If you are an investor and find a good deal nobody questions your ethics normally, as opposed to when you are a wholesaler it seems "scummy". It is like everything in life, selling cars for example. There are a ton of great folks that sell cars but the 5% bad ones are all you really hear about.

    It is something that is probably frowned upon but not illegal in a lot of peoples minds, including whatever portion of state government regulates that sort of thing. 

    2Reply
  • Lukas MichenkaPro Member
    Member since 2021 · 4 posts · 0 votes
    5y

    Hey guys,

    Just want to update the forum. Any luck with wholesaling lately? I am looking into starting it. My goal is not to buy from people that are in desperate need to sell but want to buy abandoned properties. I have seen a lot of empty houses around me that have seen a better day and have definitely a better future ahead of them. Any advice on buying empty properties? 

    0Reply
  • James McCard
    Investor · New Hartford, CT · Member since 2016 · 282 posts · 104 votes
    5y
    Originally posted by @Lukas Michenka:

    Hey guys,

    Just want to update the forum. Any luck with wholesaling lately? I am looking into starting it. My goal is not to buy from people that are in desperate need to sell but want to buy abandoned properties. I have seen a lot of empty houses around me that have seen a better day and have definitely a better future ahead of them. Any advice on buying empty properties? 

    There are definitely people that do it, I am not sure that they on these forums. I in general have made it a rule to not deal with wholesalers, as the deals they seem to be offering are not actually deals. I do not want to pay retail, lots of investors know the difference. Taking advantage of a newbie investor is not a good way to make a buck. The market is high but not that high. 

    0Reply
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